Steel Mills
Expansion Plans at NSBS Face Challenges
Written by Sandy Williams
May 28, 2019
A $700 million expansion at North Star BlueScope may be in jeopardy, according to some financial analysts who point to new challenges for the mill now that the Section 232 tariffs have been removed from Canada and Mexico.
Softening hot rolled coil prices and higher cost inputs are expected to pressure U.S. steel spreads. The reduction of tariffs on imported scrap from Turkey is raising scrap prices in the U.S., an important input for North Star. In addition, the resurgence of Canadian and Mexican steel to the U.S. market and new capacity coming online by 2022 will add to competitive pressures for the Ohio firm.
BlueScope Steel expected U.S. steel spreads to improve instead of tightening and is now likely to miss its guidance mark for FY 2019 financial results. J.P. Morgan suggests the steel producer would benefit more from a share buyback than an investment in its U.S. facility.
Credit Suisse downgraded BlueScope to neutral following lifting of U.S. tariffs on Canada and Mexico. Credit Suisse analysts say a collapse in HRC pricing in the U.S. is inevitable and will force high-cost facilities to close. Analysts at UBS agree that a pullback in HRC prices will cause some capacity re-starts to be delayed or canceled.
North Star BlueScope has reportedly filed for an air permit with the Ohio EPA for the proposed expansion, tentatively moving the project forward. Plans include a third electric arc furnace and second slab caster at the Delta, Ohio, facility. The proposed project would be completed in two to three years and would increase annual production capacity by 900,000 to 1.0 million tons. A final decision on the project is expected by BlueScope in the second half of this year.
Sandy Williams
Read more from Sandy WilliamsLatest in Steel Mills
Nucor shuttering Chicago tubular facility
Nucor is closing its Nucor Tubular Products Chicago facility and will be laying off 47 workers.
Algoma foresees narrow profit (or loss) in fiscal Q2’25
Canadian flat-rolled steelmaker Algoma predicts that it will be roughly breakeven on an adjusted EBITDA basis in the second quarter of its fiscal year. The Sault Ste. Marie, Ontario-based company expects adjusted EBIDTA in a range from a gain of $5 million CAD ($3.7 million USD) to a loss of $5 million CAD in fiscal Q2'25.
Arbitration board sides with USS over USW on Nippon deal
A board of arbitration has ruled in favor of U.S Steel vs. the United Steelworkers (USW) union in a dispute regarding Nippon Steel’s more than $14-billion proposed deal for the Pittsburgh-based steelmaker.
USS first to get nod to sell ‘ResponsibleSteel’ items at Big River
U.S. Steel is the first steelmaker in the world qualified to sell its products as “ResponsibleSteel Certified Steel” at its Big River Steel operation in Osceola, Ark.
USS: No production impact from Midwest Plant fire
A transformer caught fire at U.S. Steel’s Midwest Plant in Portage, Ind., on Sunday.